Is China Moving Toward a Gold Standard?

Peter Schiff on the Chinese market crash and the future of Chinese economic policy.

Audio Player

00:00

00:00

00:00

Use Up/Down Arrow keys to increase or decrease volume.

1x 1.1x 1.25x 1.5x 2x 3x

:15 :15

Download

Is China Moving Toward a Gold Standard?

HD Video Download

"Just like most of the products Americans buy are made in China, most of the economic problems the Chinese have are made in America," says investment guru and radio host Peter Schiff, CEO of Euro Pacific Capital. "The Chinese have decided to peg their currency to the dollar and so they have imported our monetary policy."

But as Schiff explained to Reason's Matt Welch, that may be changing. China's recent market woes may force China to change its monetary policy and Schiff believes the Chinese government is laying the groundwork to back its currency by gold.

"Quietly they have been increasing thier ownership of gold," says Schiff. "They want to untether their currency from the dollar but they don't want it to be backed by nothing."

Approximately 3 minutes.

Hosted by Matt Welch. Edited by Meredith Bragg. Cameras by Bragg and Paul Detrick.

Comments

[Mr. Flanders]

I feel like Peter Schiff is hit or miss. He successfully predicted the housing bubble remarkably well and way before everyone else (everyone laughed at him until it came true), but he also believes that the actual real-world usefulness is a required feature of sound money. That's why he criticizes bitcoin - even though bitcoin has way more usefulness than gold (such as privacy protection through encryption).

[Heroic Mulatto]

bitcoin has way more usefulness than gold

Until the lights go out.

[Mr. Flanders]

Not saying bitcoin is better than gold, just pointing out that it's not really an important factor in whether or not something can be money.

[Mr. Flanders]

*that "usefulness" isn't a factor*

[Heroic Mulatto]

How are you defining "usefulness" though? I agree that utility as far as using, say precious metals for other purposes, is not a necessary quality of good money. However, if by "usefulness" as is how well it can be used as money, then I agree with Schiff in that all Internet-based crypto suffers from issues of durability. Meaning that when you really need something like gold is when the SHTF. I doubt Comcast is going to keep humming right along during a major crisis, financial or otherwise.

Again, this is not to say crypto is necessarily bad, I have some myself. However, I recognize it as a tool for a specific context. Precious metals have utility in a wider range of contexts than crypto.

[Mr. Flanders]

I go by your first definition - so I think we're in agreement. As far as "usefulness" defined by how well it can be used as money -- of course this is extremely important... and is also why I don't own any bitcoin (I want my money to be accepted everywhere first - I'll let other people take the risk while its in its infancy).

[Heroic Mulatto]

The neighborhood pizza place takes bitcoin, which is all that really matters to me.

Fucking Feds don't need to know my dirty secret that I like pineapple and chicken on my pizza sometimes.

[Trshmnstr doesn't recycle]

*random NSA server blinks nefariously upon scanning HM's comment*

[waffles]

recognize it as a tool for a specific context

Wink wink, nudge nudge. Say no more.

[Christophe]

I should start selling woodchippers for Bitcoin on the darknet.

[Swiss Servator, rudert schwer!]

bitcoin has way more usefulness than gold

Can you make bitcoin into something a pretty girl wants to wear? Can you fill teeth with it? 🙂

[Dark Lord of the wood chipper]

I can make bitcoin into something I'd want a pretty girl to wear. Does that count?

[commodious spittoon]

+2 bits

[Free Society]

You can use the algorithm it's built on as a public record of contract fulfillment. Can't fill teeth with it, but there is something you can "use it" for other as currency.

[Sanjuro Tsubaki]

Peter Schiff...he's the man...the man who's obsessed with gold...it's getting old...

[american socialist]

"Is China moving towards a gold standard?"

Let's hope so, Peter for your investment portfolio's sake... http://www.europacificfunds.co.....mance.html

Peter, if you are reading this I'm just curious if any of your clients twitch angrily in the face-to-face meetings you've had. I started managing my money right around the time you started your fund and I'm up an annualized 8%. Maybe this fund should fire their CEO and hire me? I'll take the fees you guys are charging any day.

[Procrastinatus]

Yeah, I'm sure they'll hire an admitted thief, liar and swindler like you to manage their fund. Are those three traits common to all Socialists? Empirical evidence says yes.

[lottopol]

Most investors now believe three things about the Federal Reserve, money and interest rates. They think that the Federal Reserve is artificially depressing rates below what would be a "normal" level. They believe that in the process of doing so the Federal Reserve has enormously increased the supply of money and they believe that the USA is on a fiat money system.

Fiat money is easy to measure; M1 was $1.376 trillion in 2007 and was $2.535 trillion in May 2013. The effective money supply is the sum of fiat money and credit money. Credit money cannot be precisely measured. However, when the person in California whose occupation was strawberry picker and who had made $14,000 in his best year was able to get a mortgage of $740,000 with no money down and private equity could buy a company like Clear Channel in a $20 billion leveraged buyout, also with essentially no money down, the credit money supply was clearly much higher than today. A reasonable ballpark estimate of the credit money supply is that it was $70 trillion in 2007 compared to $50 trillion today.
The effective money supply is the sum of the traditional fiat money aggregates plus the credit money supply. Thus, despite the claims of Ron Paul and Rick Perry to the contrary, the effective or true money supply has fallen drastically over the last few years...."
http://seekingalpha.com/article/1514632

[sasob]

But the dollar is backed by something - it is backed by the power to tax, ie., the power of a gun.

[GamerFromJump]

China's not moving to a gold standard. 1) China historically used a _silver_ standard, and China's very strongly about history. 2) China will _not_ give up the ability to manipulate and lever the renmenbi, which a gold standard would require.

[pamelamathews]

Start working at home with Google! It's by-far the best job I've had. Last Wednesday I got a brand new BMW since getting a check for $6474 this - 4 weeks past. I began this 8-months ago and immediately was bringing home at least $77 per hour. I work through this link, go? to tech tab for work detail,,,,,,, http://www.careers10.tk

[Christophe]

China doesn't need gold to make their currency appreciate against USD, they just have to remove the peg they're keeping.

The big reason China's gov would want gold, is as an insurance policy against a USG default.

[???????]

Wonderful subject